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Owners Corporation update: OH&S issues for owners corporation managers

Feb 19, 2013

In the course of managing a property, owner’s corporation managers will regularly engage contractors to undertake or perform landscaping, maintenance and other trades related services.

When either an employee of the owner’s corporation or a contractor engaged by the owners corporation performs work on the property, that property becomes their workplace. The Occupational Health & Safety Act 2004 (Vic) (the OHS Act) imposes a range of duties on both employers and ‘persons who manage or control workplaces’.

The penalties for breaching your duties under the OHS Act are significant. The maximum penalties are now:

  • $1,075,050 for a body corporate; and
  • $215,010 for individuals.

The key to avoiding liability, including personal liability, for any injuries suffered by persons working or entering onto your property is ensuring that you are aware of, and actively manage, OH&S risks and hazards on any property you manage. You are required to take ‘reasonably practicable steps’ to eliminate or minimise any risks, taking into account a range of factors, one of which is the costs involved.

The OHS Act requires that employers and persons who manage or control workplaces must provide a safe working environment for their employees and contractors, and ensure that other people (such as drivers, visitors and the general public) are not exposed to risks as a result of your business.

This means that as an owners corporation manager you must ensure that you take active steps to either eliminate any risks to health and safety, so far as is reasonably practicable, or if it is not reasonably practicable to eliminate the risks, you must reduce them so far as is reasonably practicable. This duty extends to entrances and exits.

In a practical sense the duties set out in the OHS Act mean that you cannot simply rely on a contractor performing the work safely to avoid possible liability for a workplace accident on your property. You must also show that you have sought to identify and eliminate or minimise any risks that might exist. This might also involve you providing a contractor with an ‘induction’, which familiarises them with the priority, and any actual or potential risks or hazards. You also need to ensure that the contractor is appropriately qualified and/or licensed to carry out the relevant work.

You cannot ‘contract out’ of your OHS obligations, and leave compliance up to the contractor. It is important that you are aware of any risk and/or hazards that exist on the property so that steps can be taken to eliminate or minimise them. If you are aware of a problem, but fail to take steps to deal with the issue, you are more likely to be prosecuted by WorkSafe.

A related issue that arises when engaging contractors is whether an owners’ corporation needs workers compensation insurance to cover a particular contractor. This is a complex question, as it depends on the nature of the contractor.

However, the consequences of getting it wrong are significant in that if you fail to take out workers compensation when you should have, you can be fined by WorkSafe and obliged to pay the costs of the insurance premium that should have been taken out. Further, if a contractor that should be covered by insurance suffers an injury, WorkSafe may pay the compensation, but it will seek to recover from the owners’ corporation the cost of the compensation.

The main situation in which you will be obliged to have workers compensation insurance to cover a contractor (irrespective of whether the contractor is a sole proprietor, partnership, company or trust) is where:

  • the provision of materials or equipment is not the principal object of the arrangement (i.e. the contract is principally for labour);
  • at least 80% of the work is performed by the same individual; and
  • at least 80% of the contractor’s overall services income is earned from you.

In this situation, even where the contractor has their own workers compensation insurance, the proper recipient of the claim will be the owner’s corporation. So for example, where the owner’s corporation is engaging a gardening company to provide gardening services, where the services are provided primarily by one person and at least 80% of the gardening company’s income is earned from your property, then it is the owner’s corporation that must have the workers compensation insurance.

Owner’s corporations and owners corporation managers need to be aware of their obligations under the OHS Act, and should take steps to actively identify risks and hazards on the properties they manage. The duties set out in the OHS Act are not optional, and breach of these provisions may expose the owner’s corporation or owners’ corporation manager to significant penalties.

We can provide advice and guidance on strategies to manage the risks, and can assist you with undertaking risk assessments, hazard identification and minimisation.

More information

For more information, please contact a member of our Employment and Workplace Relations team on (03) 8600 8888.

Note: This update is a guide only and is not intended to constitute legal advice.